Reported by: banking|Updated: July 19, 2018
US and China have had a frosty relationship since Trump became the US president. His main concern is the phenomenal trade gap between the two countries. The US trade deficit with China rose to $375 billion in 2017. US exports to China were only $130 billion while imports from China were $506 billion. Top US exports to China are aircraft and soyabean, while top Chinese exports to US are IT, electricals, machinery and apparel. Trump wants China to reduce this trade deficit by $200 billion.
Other countries having huge trade surplus over US are Canada and Mexico, at ($300 billion each), Japan ($135 billion), and Germany and South Korea ($75 billion). India has a $50 billion trade deficit with China.
Trump began his retaliation on China by imposing 25% import duties on Chinese imports. China responded with its own import duties on import from US for the same amount. Trump has now threatened 10% duties on $200 billion of Chinese imports across a wide range of products. If China responds likewise, this trade war could very well escalate rapidly, and also engulf other nations. It could impact multiple countries and trading groups, perhaps a large part of the globe. Given the size and impact, this could well be termed as World War III.
Unlike previous World Wars, this one is not a physical war, but a financial war. Like any war, it will impact and upset the lives of millions, perhaps billions. Even if this trade war is prevented, it is not the last of such wars. With the rapid rise in globalization, global trade itself has become a new platform for war. It will be worthwhile to learn lessons from these wars at the earliest in order to prevent and minimize future wars of this nature….that is an imperative for mankind.
To war is human nature by birth….to prevent war is something we must learn. Not just physical war, but war of all types.